Calculations based on a U.S. Department of Labor inspector general report about fraud in the federal Pandemic Unemployment Assistance program nationwide indicate about $31 million in improper payments have been made in Arkansas.
A Feb. 3 update from the agency's inspector general office estimated that at least $63 billion in improper Pandemic Unemployment Assistance payments were made nationwide "with a significant portion attributable to fraud."
Historically, regular unemployment benefits experience some of the highest improper-payment rates among government benefits programs, according to the report. Improper-payment estimates for regular unemployment benefits have exceeded 10% in 14 of the past 17 years.
The report assumed an improper-payment rate of 10% for the $630 billion made available from the program under the Coronavirus Aid, Relief, and Economic Security Act.
The $2.2 trillion economic stimulus bill was passed by Congress and signed into law by then-President Donald Trump last March to help Americans cope with the economic fallout of the coronavirus pandemic. In the process, the government lowered verification standards to get the aid more quickly into the hands of the people who needed it.
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The $600 weekly supplemental unemployment benefits to jobless workers was in addition to their regular state unemployment payments.
However, the report said the inspector general's "initial CARES Act audit and investigative work indicate UI program improper payments, including fraudulent payments, will be higher than 10 percent."
From May to December, Arkansas paid $313,634,165 in program benefits, said Zoe Calkins, communications director for the Workforce Services Division of the Arkansas Department of Commerce. Ten percent of that total is $31,363,416.50.
A separate Labor Department estimate of unemployment insurance payment accuracy by state showed that the agency estimated 8.62% of the state's payments for the period from July 1, 2017, to June 30, 2020, were improper. The estimated improper payments in 2020 was $4 million. Of the seven months in 2020 that were covered in the report, only two -- May and June -- would have included federal Pandemic Unemployment Assistance payments.
The Arkansas agency declined to divulge the number of fraudulent Pandemic Unemployment Assistance claims it has identified so far and how much money was paid out under those claims, all of which must be filed with the U.S. Labor Department.
"To protect the integrity of Arkansas' unemployment insurance program, the Arkansas Division of Workforce Services cannot discuss details involving on-going fraud prevention tactics, investigations, or the scope of potentially fraudulent activity, including estimated amounts of fraudulent benefits paid or recovered," Calkins said in an email. "To do so would only give fraudsters more information, jeopardize system security and put the entire unemployment program at risk."
Gov. Asa Hutchinson and Commerce Secretary Mike Preston have provided limited insight into the level of fraud related to the program within Arkansas.
In an August news conference, Hutchinson said he had received notice that he had been approved for benefits under the portion of the program for independent contractors and self-employed people.
"Now you wonder how that can happen," he said at the time, noting that he had not applied for the benefits nor was he entitled to them.
At the same news conference, Preston said fraudulent claims for benefits had been filed under the names of several state Cabinet secretaries as part of an apparent "national, even international ring trying to defraud the system."
He said 27,000 claims for program funds and 10,000 claims for regular unemployment benefits have been frozen after being flagged as potentially fraudulent.
Last month, Preston was quoted by a television station saying that fraudulent claims had almost doubled to 50,000.
Other states have been transparent with their data.
Ohio paid at least $330 million in fraudulent pandemic unemployment benefits claims between April and December, Ohio Department of Job and Family Services Director Kimberly Henderson said recently, according to cleveland.com, an online news service. In all, 56,000 fake claims between April and December have been identified so far, she said.
Last month, California officials said that more than $11 billion in benefits were paid on fraudulent claims in the past year -- some 10% of all money paid -- and another $19 billion is under investigation, according to the Los Angeles times.
In a bid to reduce fraud, new rules require additional documentation to verify not only identities but evidence that claimants were working or self-employed during the pandemic, the Workforce Services Division announced this week.
"This documentation demonstrates a recent attachment to the labor force and serves as an important tool against fraud," the agency said in a statement.
The federal Pandemic Unemployment Assistance program was recently revised and extended under the Continued Assistance Act, enacted in December.
The division announcement said that even if claimants previously submitted proof of wages and tax documents to have their weekly benefit amount redetermined above the minimum $132, they also must submit documentation to substantiate employment/self-employment in order to satisfy this new federal requirement.
Acceptable forms of documentation will vary from claimant to claimant and depend on the unemployment situation, the agency said. Some examples include but are not limited to, paycheck stubs, earnings and leave statements showing the employer's name and address, and W-2 forms when available.
For those who are self-employed, some examples include state or federal employer identification numbers, business licenses, tax returns, business receipts, and signed affidavits from persons verifying the individual's self-employment. Those filing for Pandemic Unemployment Assistance can find full details on the documentation requirements, including a list of acceptable forms of documentation, on ARunemployment.com.